Calling all Foxes. Clem Sunter

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СКАЧАТЬ up and down when Google’s liberty was being infringed in China. Power has shifted to the ordinary man and woman in the street and, for the first time, they have a medium through which they can express themselves and gather information that knows no borders. The role of politicians has been diminished by this development and they should just accept it.

      The fact that Mark Zuckerberg, who put Facebook on the map, has been chosen as Time’s Person of the Year indicates the tectonic shift in the plates of the socio-political universe. The global village is getting on fine without the village elders butting into the conversation and interfering with its direction. Social networks now count as much as political and business networks.

      The last thing America should be doing is using heavy-handed tactics to capture Assange. He is already an Internet hero with a band of “hactivists” who want to wreak havoc on any website perceived to be complicit in making life difficult for him. He should be left to handle his own legal problems over the case that has been brought against him in Sweden by the two women. Let justice take its course.

      Shared sacrifice

      I received quite a few negative comments to this column but I still feel my basic point is valid. Around the world, there is extreme disquiet about the lopsided impact of the hard times on the different classes and income groups. Bankers, in particular, who many perceive are responsible for the dire circumstances today, appear to have got away scot free. Their bonuses are back to normal. Likewise, politicians who overgeared their countries’ balance sheets to get re-elected still have the same expense accounts. Has anyone ever audited Brussels as the grand overhead of Europe?

      My suggestion of a compulsory contribution to an NGO of choice by rich people in South Africa will save many which are doing sterling jobs from going to the wall. Undeniably, reduced corporate donations are putting a real squeeze on them and restricting their unique contributions to the community. I want the rich to demonstrate that we are all in the same boat together. Philanthropy has to be nudged to become widespread.

      “My friends and I have been coddled long enough by a billionaire-friendly Congress. It‘s time for our government to get serious about shared sacrifice.“ So wrote Warren Buffett, the founder of Berkshire Hathaway and billionaire himself, in a column in the New York Times on Monday. Coincidentally, I have been saying the same for some time, with the idea that Barack Obama should be leading from the front by taking a pay cut himself. He should insist that members of Congress do the same, particularly those from the Republican Tea Party.

      Buffett’s statement has been lauded in many quarters already and has even been picked up by Obama in his current road show to get himself re-elected. Of course, it conflicts totally with Republican fiscal policy that the only way to cure the current budget deficit is through reducing expenditure. Any rise in taxes should be stoutly resisted, the conservative wing maintains.

      In contrast, the reaction of our media and many informed observers to our own icon Desmond Tutu‘s call for a similar degree of shared sacrifice in South Africa – a country with a higher degree of inequality than America – has been extremely hostile. Admittedly, he should have couched his request in different terms and referred to the super-rich generally as opposed to whites in particular; but the point he makes about achieving a greater sense of justice and moral probity in our society is as valid here as it is in America.

      Moreover, rather than linking any form of redress to the evils of apartheid, I would have preferred Tutu to have made his plea in the current context of the economic hard times we are experiencing. The riots last week in London and in other British cities could easily be repeated here if the poor get the feeling that they are disproportionately bearing the brunt of the downturn. Shared sacrifice means something different to what happened when the Titanic sunk and virtually all the seats in the available lifeboats were taken by first-class passengers. It means creating the feeling that rich and poor alike are in the same boat and must share the hardship.

      I would propose two initiatives in South Africa to turn the principle of shared sacrifice into reality. Both initiatives would apply to people earning more than R1m a year, in other words, to the upper income group alone, regardless of race:

      1 A compulsory annual contribution to an NGO of the individual‘s choice which carries out essential work in fields such as education, health, welfare, legal representation and enterprise development in either urban or rural areas. Such a move would offset the serious financial pinch that many of our best NGOs find themselves in as a consequence of declining corporate and international contributions. Obviously, like income tax, the contribution percentage could rise as you head into the heavens of millions of rands of income but it would start at an income of one million.

      2 A one-off compulsory investment into a venture capital fund of the individual‘s choice which is devoted to creating a new entrepreneurial class in South Africa, the objective being to create one million new businesses in the economy by 2020. This will lead to the government‘s target of five million jobs by the same date. The size of the investment could be related to either a person‘s wealth or income but with the proviso that he or she is earning at least R1m a year.

      Like Warren Buffett and Desmond Tutu say, the time has come for the super-rich to come to the party. The only modification I have made with my proposals compared to those put forward by Buffet is that, bearing in mind the difference in personal wealth between the USA and South Africa, the threshold for action should be millionaires, not billionaires.

      What’s in a trillion? Lots!

      When I was young, a million was a heck of a figure. As I grew older, it became a billion or a thousand times a million. Now it is a trillion – or a thousand times a billion – which raises people’s eyebrows. In these days of quantitative easing, which is a sophisticated way of printing money, it won’t be long before a quadrillion – or a thousand times a trillion – becomes the norm. Remember, it is all just paper money and the only thing that changes is the number of zeroes. Inflation is the name of the game. It helps governments accommodate their debt problems.

      Every newspaper talks breezily about how many trillion dollars have been wiped off global stock markets whenever markets crash. The debt ceiling in America has just been raised to nearly $17 trillion which is a trifle higher than America’s current GDP. Their existing budget deficit, if you deduct government expenditure from all the taxes they collect, is around $1.4 trillion. In other words, they are still in a net borrowing as opposed to a net repayment mode.

      Let me give you a feel, therefore, of what a trillion really means. There are nearly 32 million seconds in a year which translates into 32 billion seconds in 1 000 years and 32 trillion seconds in a billion years. Assuming no interest on the debt, to pay off the projected US debt at $1 a second or $32m a year – which would stretch the pocket of even Bill Gates – would take a period of 17 trillion seconds, which is roughly 531 000 years. Not much was happening on our planet that long ago; and, in over 500 000 years‘ time, we will need to have adapted to living in a microwave oven on the assumption that the climate change experts are correct.

      Furthermore, if you add in interest payable on the loan of say 2% per annum, the magic of compounding has to be figured into the equation. For starters, 2% of $17 trillion is a mere $340bn in the first year. This has to be added to the $32m repayment to create a sum which is way beyond Bill Gates or even most countries to service. Moreover, should you miss out on repayments of interest and capital, the total amount doubles every 35 years, meaning that you could owe $34 trillion before the middle of this century in the event of habitual default.

      These fantastic amounts should convince you about two things. Firstly, Americans must believe in an unbounded universe to have borrowed so much money and feel that they do not have to quit as long as there is more credit available. You have to be a debt junkie to get to $17 trillion or $57 000 per capita and keep your hand out. Secondly, the Chinese and СКАЧАТЬ